Saturday, August 10, 2013

Heritability of baseball and business

The latest Freakonomics podcast claims that business competence is not heritable, and gives this example:

DUBNER: So traits that are important for something like sports are pretty heritable. Consider the son of a Major League Baseball player. You want to know how much more likely it is that he’ll also play in the majors compared to the average kid? Eight hundred times more likely. Not eight times, eight hundred. ...

McGUE: Other traits are much less heritable. Most behavioral traits would be a lot less heritable than height. So personality characteristics, maybe the heritability estimate would be on the order of forty to fifty-percent. IQ might be higher. Might be fifty, sixty, some would argue seventy-percent. Do you know the story of the Vanderbilts?

The original Vanderbilt, at least the original rich one made his money in the railroad business in the 19th century. ... But after that the wealth started to really digress. To where today, if you think about it, how many leaders of industry do you know named Vanderbilt? You don’t know any. Even though that was his goal a hundred and fifty years ago, to establish this family dynasty. You don’t know of any famous Vanderbilts in the railroad business or anything.

Yes, we all do know a famous and accomplished member of the Vanderbilt family. CNN TV anchor Anderson Cooper is the son of Gloria, the one who was supposedly the proof of the family's decline. The show did not mention Cooper. (Cooper himself is gay, and not likely to have an heir.)

The show actually have several examples of heirs to successful businesses who went on to also be extremely successful, both in the USA and overseas.

I did not know that rich Japanese businessman will legally adopt a 25yo son in order to have a more competent heir, and that this is so common that the median age for adoption in Japan is about 25.